Exhibit 10.9


 


*** CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND


FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE


COMMISSION PURSUANT TO RULE 24B-2 OF THE


SECURITIES EXCHANGE ACT OF 1934, AS AMENDED


 


SUBCONTRACT AGREEMENT

BY AND BETWEEN

MEMBERHEALTH, INC.

and

COMMUNITY CARE RX, L.L.C.

as of

October 21, 2005


 


This
SUBCONTRACT AGREEMENT (this “Agreement”), dated as of October 21, 2005
(the “Effective Date”), is made and entered into by and between
MEMBERHEALTH, Inc. (“MHRX”), an Ohio corporation, and Community Care Rx,
L.L.C. (“CCRX”), a wholly owned subsidiary of the National Community
Pharmacists Association (“NCPA”),


 


WHEREAS,
the Medicare Prescription Drug Benefit program was established by
Section 101 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (the “MMA”) and created a new Part D, known as
the Voluntary Prescription Drug Benefit Program (hereinafter referred to as
“Part D”) which Part D implementing regulations are found at 42 C.F.R
Part 423 (the “Part D Regulations”);


 


WHEREAS,
MHRX has submitted an application to the Centers for Medicare and Medicaid
Services (“CMS”) under Part D to become a Prescription Drug Plan (“PDP”)
or (“Part D Plan(s)”) sponsor in each of the thirty-four (34) Part D
regions designated by CMS;


 


WHEREAS,
MHRX will act as a sponsor of certain Part D Plans and will contract with
CMS to offer one or more Part D Plans to eligible Medicare beneficiaries
(“Part D Beneficiaries”) under Part D (the Part D Plans as
sponsored by MHRX in accordance with Part D and this Agreement shall
hereinafter be referred to as the “MHRX Plan(s).”);


 


WHEREAS,
CCRX, desires to assist MHRX, and MHRX desires the assistance of CCRX, to
become a sponsor of, and to operate, one or more Part D Plans in one or
more of the thirty-four Part D regions designated by CMS for the purposes
of offering a Part D Plan, and to provide resources and certain assets in
connection with the operation of the MHRX Plans.


 


NOW,
THEREFORE, in consideration of the covenants, representations, and warranties
set forth in this Agreement, and for the mutual benefits to be derived there
from, the Parties agree as follows:


 






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ARTICLE
I


SERVICES AND OBLIGATIONS OF CCRX


 


SECTION 1.01 General
Responsibilities. CCRX shall provide to MHRX the services
(collectively, the “Services”) and licenses set forth in this Article I.
The Services shall be performed, at a minimum, consistent with the timeliness,
accuracy, and quality standards set forth in the Part D Regulations, provided,
however, that the Parties may from time to time in writing agree to
standards in addition to, or in excess of, those established by CMS.


 


SECTION 1.02
Supplies and Services to be Furnished by CCRX. CCRX shall, except as
otherwise provided herein, furnish the personnel, materials, equipment, and
property necessary to perform the work identified in the Statement of
Work/Specification (“SOW”) attached hereto as Attachment 1, which is
attached hereto and incorporated herein by reference, in conformance with the
Part D Regulations, and consistent with the standards of performance described
herein. MHRX shall reimburse CRRX for all costs for the work identified in Attachment
1 in accordance with the Compensation Schedule set forth in Attachment 2,
which is attached hereto and incorporated herein by reference.


 


SECTION 1.03
License to Use CCRX Marks. CCRX will provide to MHRX an exclusive
license (as to third parties) to use the names and marks “Community Care Rx”
and “CCRX” (collectively the “Mark”) with respect to Part D Plans marketed
to individuals (as compared to group plans) as set forth herein. CCRX agrees
that it will not grant a license to use the Mark to any other entity for the
purpose of using the Mark to promote, or in connection with, a Part D Plan
serving the individual beneficiary market so long as MHRX has a license to use
the Mark under the terms of this Agreement. Each party shall use the Mark as
the primary brand for the MHRX Plans, and only with respect to the MHRX Plans,
subject to the terms herein. CCRX agrees that it shall not use the Mark in a
manner that would compete with MHRX. CCRX acknowledges that MHRX contemplates
the use of the Mark in co-branding opportunities with other health care
organizations, retail pharmacy organizations, insurance companies and other
entities who are endorsing the MHRX Plans or contracting for services with
MHRX. MHRX shall notify CCRX of all potential co-branding opportunities with
other entities to market the MHRX Plans. CCRX shall have the right to object to
the placement and form of the Mark in said co-branding marketing opportunities,
but it may not object to the entity with which MHRX co-brands so long as the
co-branding opportunity is consistent with the Guiding Principles. Except as
set forth herein, MHRX agrees that it shall not use any secondary branding for
the MHRX Plans without the prior written consent of CCRX, which shall not be
unreasonably withheld, except for the marks of Computer Sciences Corporation
and Community Care Outreach Services, LLC. All other marks, whether MHRX’s or
otherwise, shall be secondary to the Mark in connection with any of the MHRX
Plans. MHRX shall not sublicense or assign this license or the rights contained
herein to any other party except as expressly allowed, in writing, by CCRX,
provided that MHRX requests CCRX’s approval to sublicense in writing at least
fifteen (15) days prior to the date on which it wishes for the sublicense to
begin, and at that time it submits the


 






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written
request, it provides to CCRX all information necessary in order for CCRX to
determine the ability of the potential sublicensee to live up to the terms of
this Agreement. MHRX shall be responsible for ensuring that any sublicensee
complies with the terms of this Agreement. MHRX recognizes the value of the
goodwill inherent in the Marks, and that the Marks and the goodwill associated
therewith is owned by CCRX. MHRX understands that it shall not acquire any
right, title, or interest to the Marks, and that all use of the Marks by MHRX
shall inure to the benefit of CCRX. MHRX shall use, and shall cause others
authorized under this Agreement to use, the Marks in a manner and quality
reasonably acceptable to CCRX, and shall use with the Marks all trademark ownership
notices or legends as may be required by CCRX. The license granted hereunder
shall expire on the date on which this Agreement terminates as set forth in
Article VI, unless as may be extended as provided herein, and upon
termination MHRX shall promptly cease use of the Marks, and all materials
bearing the Marks, and shall promptly return to CCRX all materials that bear
the Marks that are in its possession or control. Except as may be agreed in
writing by the Parties or otherwise set forth in this Agreement, MHRX
acknowledges that its use of the Mark after termination of this Agreement or in
violation of this Agreement may result in immediate and irreparable damage to
which CCRX may have no adequate remedy at law. MHRX shall comply with all State
and Federal laws and other governmental regulations and guidelines in its use
of the Marks pursuant to the license granted herein.


 


SECTION 1.04
License to Use Software Furnished by CCRX. CCRX hereby grants MHRX a
non-exclusive license to use the software developed and owned by CCRX (or its
Affiliate) for the purposes of providing medication therapy management services
(“MTM”) that is provided to MHRX pursuant to this Agreement (the “Software”).
The parties acknowledge that it is the intent of the parties that MHRX shall be
able to use and/or license the Software to others for the provision of MTM
Services, upon terms and conditions reasonably acceptable to CCRX. In that
regard, MHRX shall have the right to sublicense or grant rights to the Software
to a third party upon terms and conditions acceptable to CCRX. Except as set
forth in the prior sentence, MHRX shall use the Software only in conjunction
with services provided by CCRX under this Agreement and for no other purposes
whatsoever, including, without limitation, the development of other software
with similar functionality (nothing herein shall prohibit MHRX to develop its
own software, but without using the software). CCRX further provides MHRX a non-exclusive
license to use the clinical protocols, policies, procedures, and documentation
for MTM developed by CCRX (or its Affiliates) (the “Protocols”). The license
granted in this Section 1.04 shall expire on the date on which this
Agreement terminates as set forth in Article VI, and upon termination MHRX
shall promptly return to CCRX all copies of the Software and Protocols in its
possession or control. Except as may be agreed in writing by the Parties or
otherwise set forth in this Agreement, MHRX acknowledges that its use of the
Software or the Protocols after termination of this Agreement or in violation
of this Agreement may result in immediate and irreparable damage to which CCRX
may have no adequate remedy at law. All rights not specifically granted to MHRX
hereunder are specifically reserved for CCRX. MHRX shall comply with all State
and Federal laws and other governmental regulations and guidelines relating to
its use of the Software and Protocols pursuant to the license granted herein.


 






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SECTION 1.05
Intellectual Property Infringement Indemnification. In the event that a
third party brings a claim of trademark infringement against MHRX for trademark
infringement based on MHRX’s use of the Mark during the term of this Agreement,
or a claim of copyright infringement for MHRX’s use of the Software during the
term of this Agreement, MHRX shall promptly notify CCRX of such claim of
infringement. CCRX shall commence or prosecute any such claims in its name and
at its own costs, provided that such allegations of infringement were not
caused by actions of MHRX or its agents, including misuse of the Mark or the
Software or breaches of this Agreement, and provided that MHRX cooperates in
any enforcement efforts and any actions, claims, or suits that may be brought
by CCRX as set forth herein in connection with the Property during the term set
forth above, and CCRX shall indemnify MHRX for any reasonable and necessary
costs related thereto, including but not limited to MHRX’s reasonable
attorneys’ fees.


 


SECTION 1.06
Other Activities. Neither party shall use the Property or conduct any
activity, or allow its Affiliates or subcontractors to conduct any activity,
which would materially affect the validity or enforceability of the Mark,
adversely affect the right or ability of the other party to demonstrate to the
public the quality of services it provides, result in material damage of the
reputation or goodwill of the other party, or cause any material adverse
publicity to the other party.


 


ARTICLE II


REPRESENTATIONS AND WARRANTIES OF MHRX


 


SECTION 2.01
MHRX hereby represents, warrants, and covenants to CCRX as follows:


 


(a)                                  Corporate
Status. MHRX is a corporation duly incorporated, validly existing and in good
standing under the Laws of the State of Ohio. MHRX has the corporate power and
authority, and all licenses, permits, waivers or other authorizations required
for MHRX to carry on its business as now conducted and as contemplated by this
Agreement, except where the failure to possess any such authority,
authorization, licenses, permits, waivers or other authorizations would not
have a material adverse effect.


 


(b)                                 Part D
Qualification. MHRX will operate under CMS waiver or as a risk
bearing entity licensed to provide health insurance benefits in each of the
fifty states, the District of Columbia, the U.S. Virgin Islands and Puerto
Rico, and has developed, or will develop, a pharmacy network that meets, or will
meet, CMS access standards for a PDP Sponsor; and otherwise qualifies for one
or more Part D contracts.


 


(c)                                  Part D
Contract Requirements. MHRX will comply with all
of the requirements imposed by any Part D Contract it executes with CMS, provided,
however, that MHRX’S failure to comply with any Part D Contract
requirements will not be


 






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4

















 


grounds
for termination of this Agreement unless CMS terminates the Part D
Contract based on MHRX’s failure to comply.


 


(d)                                 State Licensure. MHRX will
continuously maintain all appropriate state insurance licenses, permits,
waivers or qualifications for the provision of its services to Enrollees under
the PDP.


 


(e)                                  Part D
Applications for 2007-2010 Coverage Years. MHRX shall complete and
submit PDP applications for the 2007-2010 Coverage Years unless this Agreement
is terminated by either or both of the Parties prior to the due date for a PDP
application for any of these Coverage Years.


 


(f)                                    Guiding
Principles. MHRX will at all times during the term of
this Agreement operate the MHRX Plans and any Part D Plan that it
sponsors, whether individual or group plan, and whether or not bearing the
Mark, in accordance with the Guiding Principles set forth in Attachment 4.


 


(g)                                 Pharmacy
Methodologies. Unless otherwise approved by CCRX, MHRX
shall administer the MHRX Plans at all times in a manner such that
(i) there shall be an open pharmacy network (i.e., no preferred network,
no preferred pricing, and no co-pay differentials), and (ii) there shall
be no mail order component to the MHRX Plans. CCRX shall have the right to
review any and all pharmacy reimbursement and/or pharmacy professional fee
formulas or methodologies applicable to the pharmacies and any changes made
thereto in the future (“Pharmacy Methodologies”). Notwithstanding
anything herein to the contrary, should CCRX, in its sole discretion, decide
that Pharmacy Methodologies are inconsistent with its mission, it may terminate
this Agreement immediately without penalty.


 


ARTICLE
III


REPRESENTATIONS AND WARRANTIES OF CCRX


 


SECTION 3.01 CCRX hereby represents and
warrants to MHRX as follows:


 


(a)                                  Subsidiary/Parent
Status. CCRX operates as a limited liability company under the Laws of the
State of Virginia and is a wholly owned subsidiary of NCPA.


 


(b)                                 Property Rights. CCRX
represents, warrants, and covenants to MHRX that CCRX has obtained, or will
duly obtain, all intellectual property rights necessary to perform its
obligations under this Agreement. CCRX’s certification to these intellectual
property rights is a material representation of fact upon which MHRX relied
when this Agreement was entered into by the Parties.


 


(c)                                  PDP Endorsement. CCRX shall
only endorse the MHRX Plans and shall not endorse any other PDP. MHRX
acknowledges that individual NCPA members


 






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5

















 


shall
make individual and independent decisions regarding their participation in any
PDP, including the MHRX Plans. CCRX neither represents nor warrants the
participation of any NCPA members or pharmacies in the MHRX Plans.


 


(d)                                 Contracting
Capacity. CCRX represent, warrants, and certifies that
(1) as to itself within the last five (5) years, and (2) their
employees and subcontractors that will be assigned to perform Services
hereunder within the five-year period preceding their initial performance
hereunder, to CCRX’s knowledge: (i) are not debarred, suspended, proposed
for debarment or suspension, or otherwise excluded or declared ineligible for
the award of contracts by or participation in any Federal program, department
or agency; (ii) have not been charged with, convicted of or had a civil
judgment rendered against them for: commission of a fraud or a criminal offense
in connection with obtaining, attempting to obtain, or performing a public (Federal,
state, or local) contract or subcontract; dishonesty or breach of trust
including but not limited to violation of Federal or state antitrust statutes,
commission of a fraud including but not limited to mail fraud or false
representations, violation of fiduciary relationship, securities offenses,
embezzlement, theft, forgery, bribery, falsification or destruction of records,
making false statements, tax evasion, or receiving stolen property;
(iii) have not been indicted for, or otherwise criminally or civilly
charged by a government entity (Federal, state, or local) with, commission of
any of the offenses enumerated in this Section; (iv) have not had one or
more public agreements or transactions (Federal, state, or local) terminated
for cause or default; and (v) have not been excluded from participation
for a federal program, including but not limited to, Medicare, Medicaid,
federal health care programs or federal behavioral health care programs
pursuant to Title XI of the Social Security Act, 42 U.S.C. 1320a-7 and other
applicable federal statutes. CCRX shall provide immediate written notice to
MHRX if, at any time during the term of this Agreement, CCRX learns that its
certification in this Section was erroneous on the Effective Date of this
Agreement or has become erroneous by reason of new or changed circumstances. If
the circumstances causing such certification to be erroneous are curable, then
CCRX shall have forty-five (45) days to cure such circumstances. Furthermore,
if the circumstances causing such certification to be erroneous relate to a
non-compliant employee or subcontractor then CCRX shall be deemed to have
timely cured such circumstances, so long as CCRX completely removes such
employee or subcontractor from performing any Services hereunder immediately
upon learning that such employee or subcontractor is non-compliant with this
Section. Subject to the foregoing cure provisions, if it is later determined
that CCRX’s certification in this Section was erroneous on the Effective
Date of this Agreement or has become erroneous by reason of new or changed
circumstances, in addition to other remedies available to MHRX, MHRX may
terminate this Agreement for convenience, at its sole discretion.


 






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ARTICLE
IV


COMPENSATION


 


SECTION 4.01
Compensation Schedule. CCRX shall be paid by MHRX for the Services and
Property, as defined in Article I herein, rendered hereunder accordance
with the compensation schedule set forth in Attachment 2.


 


SECTION 4.02
Taxes, Freight and Delivery Charges. Except as may otherwise be provided
in this Agreement, all compensation paid by MHRX to CCRX for the Services and
Property, as defined in Article I herein, includes applicable federal,
state and local income taxes, freight, and/or delivery charges.


 


SECTION 4.03
Financial Management Team. The Parties shall establish a Financial
Management Team (“FMT”) who shall review the financial performance of the
Parties pursuant to this Agreement, and shall comply with the provisions set
forth in Attachment 2. The FMT shall consist of two (2) persons
representing CCRX, two (2) persons representing MHRX, and such other
persons as may be agreed upon from time to time by CCRX and MHRX.   ***   .
CCRX and MHRX shall each have the right to remove and/or appoint
replacements for their respective representatives on the FMT in their
respective sole discretion. CCRX and MHRX shall each cause their respective
members on the FMT to meet, whether in person or telephonically, as often as is
reasonably necessary to carry out their duties as set forth herein, but in no
event less than once every thirty (30) days.


 


ARTICLE
V


ADDITIONAL AGREEMENTS


 


SECTION 5.01
Legal and Regulatory Compliance. Each Party shall carry out its duties
and obligations under this Agreement in material compliance with all applicable
Laws. Each party shall provide the services set forth in this Agreement in
accordance with the terms and conditions of this Agreement and in a manner
consistent with the requirements of the Medicare statutes and regulations, CMS
guidance with respect to the Part D Program, and MHRX policies, including,
but not limited to, MHRX’s CMS-required compliance programs with respect to
Medicare Part D, as amended from time to time, and training thereon, provided,
however, that such policies and compliance programs, as amended, shall have
been furnished in writing to CCRX and there shall have been a reasonable period
of time for their implementation. With respect to MHRX policies other than
MHRX’s CMS-required compliance program, MHRX shall not require compliance by
CCRX in excess of that required of MHRX’s other Part D subcontractors.


 


SECTION 5.02
Performance of Duties. The Parties agree to perform their duties
hereunder with the skill, diligence, and expertise commonly expected from
experienced and qualified personnel performing such duties and in conformance
with industry standards and the requirements of this Agreement, the Part D
Regulations, and other applicable Law.


 






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SECTION 5.03
Duty to Cooperate In Submission of Part D Plan Application and Bid.
The Parties agree to work together to complete and submit the PDP applications
and the Part D bids, and to keep the other Party fully advised of issues
raised by or with the Centers for Medicare & Medicaid Services
(hereinafter “CMS”.) The Parties agree to cooperate with each other by
furnishing any additional information and executing and delivering any
additional documents as may be reasonably requested by the other Party to carry
out the transactions contemplated by this Agreement, or to aid in the
preparation of any regulatory filing, financial statement, or tax return; provided, however,
that any such additional documents must be reasonably satisfactory to each of
the Parties and must not impose upon either Party any material liability, risk,
obligation, loss, cost, or expense not contemplated by this Agreement.


 


SECTION 5.04
Inspection, Audit and Acceptance.


 


(a)          As required by 42 C.F.R. § 423.505, MHRX and CMS
shall have the right, directly or through their designated auditors, at all
reasonable times to inspect, audit, or otherwise evaluate the work performed or
being performed by CCRX, its supporting policies and procedures, including
those related to data security, disaster recovery and back-up, as well as all
data supplied, in the performance of this Agreement. If any inspection or
evaluation is made by MHRX or CMS on the premises of CCRX or any of CCRX’s
Affiliates, CCRX or its Affiliates shall provide at no additional charge all reasonable
facilities and assistance for the safety and convenience of the personnel
conducting the inspection or evaluation. The Secretary of Health and Human
Services, the Comptroller General of the U.S. Government Accounting Office, or
their designees shall have the right during the term of this Agreement and for
a period of ten (10) years after termination of this Agreement or the date
of the audit completion, whichever is later, to audit, evaluate, or inspect any
books, contracts, medical records, documents, papers, enrollee documentation,
and other records of CCRX, related entity, subcontractor, or transferee that
pertain to any aspect of the Services provided under this Agreement, or as the
Secretary may deem necessary to enforce the applicable Medicare Contract
between CMS and MHRX. Any audit, evaluation, or inspection covered by this
Section 5.02(a) shall be at no additional charge to MHRX, but each
Party will be responsible for its own labor and out of pocket expenses.


 


(b)         All Services provided by CCRX to MHRX shall be in
accordance with the requirements of this Agreement, including all attachments,
schedules, annexes, and exhibits. No inspection or evaluation performed by
MHRX, its Affiliates, or CMS shall in any way relieve CCRX of its obligation to
furnish all required Services in strict accordance with the requirements of
this Agreement. If any of the Services do not conform to the requirements of
this Agreement, MHRX shall have the right to require CCRX to take such steps as
are reasonably necessary to bring its performance into compliance including,
but not limited to, requiring


 






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CCRX
to perform the work or services again in conformity with the applicable
requirements at no cost to MHRX or CMS.


 


SECTION 5.05
Privacy and Security of Certain Data. The Parties expect to be
responsible for obtaining, analyzing, storing, transmitting, and reporting
Protected Health Information, as defined in regulations, 45 CFR Parts 160 and
164, implementing the Health Insurance Portability and Accountability Act of
1996, Pub. L. 104-191 (“HIPAA”). Each Party, to the extent it is a HIPAA
covered entity, agrees to comply with all applicable Federal and State privacy
and security laws including but not limited to the requirements of HIPPA. The
Parties agree to execute and comply with the terms set forth in the HIPAA
Business Associate Agreement attached hereto and incorporated herein as Attachment 3.


 


SECTION 5.06
Assignment and Subcontracting. Except as described on Attachment 1, CCRX is solely
responsible for the provision of the Services and its other obligations under
this Agreement. CCRX may not assign or transfer, in whole or in part, these
obligations, any interest in this Agreement, any claim under this Agreement, or
any obligation or task hereunder, except to its Affiliates, without the consent
of MHRX, which shall not be unreasonably withheld, delayed, or conditioned.
CCRX shall have the right to administer the MTM services through its Affiliate
Community MTM Services, L.L.C. so long as that entity remains an Affiliate of
CCRX. Any delegation by CCRX of functions or responsibilities imposed pursuant
to this Agreement other than to its Affiliates shall be subject to the prior
written approval of MHRX and shall also be subject to the requirements set
forth in 42 C.F.R. § 423.505(i)(4), as they may be amended over time; provided,
however, that MHRX hereby consents to CCRX’s delegation to non-network
pharmacists of certain MTM functions, and delegation of the provision of the
MTM clinical encounter to individual pharmacists or pharmacy companies.


 


SECTION 5.07
Delegation of Duties. The parties acknowledge that
MHRX shall oversee and will be accountable to CMS for any functions or
responsibilities described in the Part D Regulations and, upon becoming a
sponsor of the PDP, will monitor the performance of CCRX on an ongoing basis.
CCRX shall perform its obligations under this Agreement in a manner consistent
with and in compliance with MHRX’s contractual obligations under MHRX’s
Part D Contract with CMS. In the event that MHRX delegates to CCRX any
function or responsibility imposed pursuant to MHRX’s Part D Contract with
CMS, such delegation shall be subject to the requirements set forth in 42
C.F.R.§ 423.505(i)(4), as they may be amended over time.


 


SECTION 5.08
Document Retention, Audit Rights. Each Party shall retain, in
accordance with standard and accepted practices, such financial, accounting,
and administrative records related to the services it is obligated to provide
under this Agreement for such period as is necessary to comply with applicable
Law, but in no event less than ten (10) years after the date such
documents and information are created or obtained, or longer under the
conditions enumerated in 42 C.F.R. § 423.505(e)(4). Subject to applicable Law,
during the term of this Agreement MHRX, on one hand, and


 






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CCRX,
on the other hand, may reasonably conduct (or have conducted on its behalf), at
its own expense, one audit each year of the other Party with respect to
relevant documents and data in the possession of such other Party and with
reasonable access to relevant personnel of such other Party upon reasonable
notice solely for the purposes of confirming compliance with obligations undertaken
pursuant to this Agreement including those that are required to be reported to
an applicable government agency; provided, however, that
such audits may be performed more frequently to the extent necessary to respond
to a request by CMS or another government agency. The terms of the confidentiality
provisions set forth in Article VII hereof shall apply to any such audits.
Such audit rights will be available following termination of this Agreement to
the extent necessary to respond to a request by a customer, Governmental
Authority, provider or other relevant party and for a Party’s need to manage
litigation and to determine compliance with this Agreement or applicable Laws.


 


SECTION 5.09
Non-Solicitation. Neither Party shall directly solicit employees of the
other to undertake employment with it during the term of this Agreement and for
a period of one (1) year after termination for any reason. Direct
solicitation does not include advertisements in the general media and, except
to the extent that an individual was specifically encouraged to respond to such
advertisements, there shall be no restrictions on the hiring of an individual
so responding. Notwithstanding anything herein to the contrary, each party is
free to employ any individual who has approached that Party about employment
without being solicited (other than by advertisements in the general media).


 


SECTION 5.10
Publicity. Each Party agrees to submit to the other Party for review, to
the extent practicable, any news releases, public announcements,
advertisements, or publicity each may release in connection with the MHRX
Plans. Notwithstanding the foregoing, MHRX shall submit to CCRX for
pre-approval, which pre-approval shall not be unreasonably withheld, delayed,
or conditioned, any and all news releases, public announcements or publicity
MHRX intends to release directly to the pharmacy community regarding the MHRX
Plans.


 


SECTION 5.11
Exclusivity of CCRX Services. For so long as CCRX provides the services
set forth in this Agreement, MHRX agrees that CCRX is and shall be the
exclusive subcontractor in connection with the services as set forth in the
Statement of Work (Attachment 1) and MHRX shall not, directly or
indirectly, engage the services of any other person or entity in connection
with the services to be rendered by CCRX. Notwithstanding anything herein to
the contrary, nothing herein shall preclude CCRX or its Affiliates
(i) from using the Property for its or their own business purposes or
(ii) from providing MTM Services or any other services to any other third
party.


 


ARTICLE
VI


AGREEMENT CONTINGENT;

TERM AND TERMINATION


 


SECTION 6.01
Term. For the purposes of this Agreement, “Coverage Year” shall mean any
calendar year during which MHRX offers, sells, and sponsors one or more PDPs to


 






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Part D
Beneficiaries. The initial term of this Agreement shall commence as of the
Effective Date and will continue until and through December 31, 2010,
unless otherwise terminated by either Party pursuant to the terms set forth
herein below.


 


SECTION 6.02
Renewal of Term. Subject to the terminations
set forth in this Article VI, this Agreement shall renew automatically for
additional one (1) year terms equal to each subsequent Coverage Year,
beginning with the 2011 Coverage Year and continuing thereafter until
terminated.


 


SECTION 6.04 Termination For
Cause.


 


(a)                                  Either Party
may terminate this Agreement for Cause, as defined below, upon written notice
to the other Party. Such termination shall be effective upon receipt of written
notice of termination.


 


(b)                                 For the
purposes of this Agreement, “for Cause” shall be defined as any of the
following: (i) a material breach of the terms of this Agreement which is
not cured by the breaching party within thirty (30) days from the date the
breaching party received written notice of the breach (in the event that the
breaching party cannot cure the breach within thirty (30) days from the receipt
of notice of the breach despite its good faith efforts to do so, the Parties
agree to extend such thirty (30) day period for another thirty (30) days
provided that the breaching party continues its good faith efforts to cure the
breach during such period of time); (ii) a Party is adjudicated to have
committed fraud in a civil proceeding or otherwise settles a civil fraud action
involving the United States for a material amount, or a criminal action is
filed by a governmental agency against a Party arising out of, or relating to,
the PDP, or a Party is excluded or barred from
participation in any federal or state health care program pursuant to 42 U.S.C.
§ 1320a-7; (iii) a Party is declared insolvent in any proceeding;
(iv) with respect to MHRX, in the event CMS terminates the Part D
Contract based on MHRX’s failure to comply with the terms thereof.


 


SECTION 6.05
Termination Without Cause. Neither party shall have the
right to terminate this Agreement without Cause except as is specifically set
forth herein below.


 


(a)                                  Either Party
shall have the right to terminate this Agreement without Cause effective at the
end of the 2010 Coverage Year, or at the end of any subsequent Coverage Year,
upon providing the other party written notice of termination no less than one
hundred fifty (150) days prior to the date that MHRX must submit its
application to be a sponsor of a Part D Plan for the following Coverage
Year. By way of example only, in the event that MHRX desires to terminate this
Agreement without Cause effective at the end of the 2010 Coverage Year, and the
applications for the 2011 Coverage Year are due on May 31, 2010, then MHRX
shall give written notice of termination no later than December 31, 2009.


 






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(b)                                 CCRX shall have
the right to terminate this Agreement at any time without Cause in the event
MHRX elects not to apply as a sponsor of a PDP Plan in at least 70% of the
Part D Regions, or in the event CMS does not approve MHRX as a sponsor of
a PDP Plan in at least seventy percent (70%) of the total Part D Regions.


 


(c)                                  CCRX shall have
the right to terminate this Agreement without Cause pursuant to Section 2.01(g).


 


(d)                                 In the event
that CCRX exercises its right to terminate without Cause as set forth herein
above, MHRX shall have no obligation to pay any performance awards as set forth
in Attachment 2 based upon performance that occurs subsequent to
the date of termination.


 


(e)                                  In the event
CCRX terminates this Agreement without Cause pursuant to
Section 6.05(a) or (b), MHRX’s license to use the Mark pursuant to
Section 1.03 shall be extended for a period of one (1) year from the
date of termination, and MHRX shall pay to CCRX a license fee of   ***   for the use of
the Mark for such one year period after termination. This one year extension to
use the Mark shall not apply in the event MHRX is not a PDP sponsor in at least
one PDP region. Should MHRX cease using the Mark at any time during such one
(1) year period set forth herein above, MHRX shall notify CCRX in writing
of said cessation and MHRX.


 


(f)                                    In the event
MHRX terminates this Agreement without Cause pursuant to Section 6.05(a),
or in the event CCRX exercises its right to terminate this Agreement without
Cause pursuant to Sections 6.05 (c), MHRX shall as of the date of termination
immediately cease all further use of the Property or any further reference to
it, direct or indirect, or any reproduction or copy thereof in connection with
the use of the Property. MHRX shall return to CCRX all materials, including but
not limited to marketing and advertising materials, signage, business cards and
business forms that contain the Property.


 


SECTION 6.06
Survival. The termination of this Agreement for any reason,
shall not affect those obligations or causes of action that have theretofore
accrued or, that from the context hereof, are intended to survive the
termination of this Agreement.


 


ARTICLE
VII


CONFIDENTIALITY; USE OF INTELLECTUAL PROPERTY;

ENROLLEE DATA


 


SECTION 7.01
Confidentiality. Prior to entering into this Agreement the Parties
have each committed substantial resources to developing the arrangements
described in this Agreement. The Parties specifically acknowledge that to
induce each other to enter into this Agreement each Party specifically confirms
that all Confidential Information received from the other party at any time
shall remain confidential during the term of this Agreement and shall be used
only in furtherance of the business relationships


 






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12

















 


contemplated
by the provisions of this Agreement. In this regard, each Party agrees that any
Confidential Information provided to it will only be provided to its employees,
agents, Affiliates and representatives on a “need to know” basis, and will be
treated with at least as much care as the receiving party provides for its own
Confidential Information (and in no event treated with any less than a high
degree of confidentiality.)


 


ARTICLE
VIII


SURVIVAL; INDEMNIFICATION


 


SECTION 8.01
Survival of Representations and Warranties. Notwithstanding any
investigation made by or on behalf of the Parties hereto, the results of any
such investigation, or the knowledge of MHRX or the knowledge of CCRX
(regardless of how obtained), the representations and warranties contained in
Articles II and III hereof and the indemnification obligations of the Parties
with respect thereto, and the provisions of Article IX (Dispute
Resolution), shall survive the expiration or termination of
this Agreement until the later of (i) one (1) year following such
expiration of MHRX’s license to use the Mark or (ii) the applicable
statute of limitations.


 


SECTION 8.02
Mutual Indemnification.


 


(a)                                 Subject to the
terms and conditions of this Article VIII, CCRX shall hold harmless and
indemnify MHRX from any claims, losses, damages, liabilities, costs, expenses
or obligations, including reasonable attorney’s fees and expenses related to
the performance of this Agreement (collectively, “Losses”) that arise out of or
result from (i) the breach of any representation or warranty of CCRX under
this Agreement, or (ii) the negligence or willful
misconduct of CCRX, its officers, employees and agents in the performance of
CCRX’s obligations under this Agreement, including the provision of MTM
Services.


 


(b)                                Subject to the
terms and conditions of this Article VIII, MHRX shall hold harmless and
indemnify CCRX from any Losses that arise out of or result from (i) the
breach of any representation or warranty of MHRX under this Agreement,
(ii) the negligence or willful misconduct of MHRX, its officers, employees
and agents in the performance of MHRX’s obligations under this Agreement,
(iii) any and all claims arising from injury or allegations of injury to
beneficiaries; or (iv) any and all claims arising out of MHRX’s activities
as a pharmacy benefit manager, including, but not limited to, plan design.


 


SECTION 8.03
Method of Asserting Third-Party Claims.


 


(a)                                  As used in this
Agreement, “Notifying Party” refers to any Party who claims entitlement to
indemnification under Section 8.02 for losses resulting from a third-party
claim. The “Indemnifying Party” refers to the Party obligated to indemnify the
Notifying Party under Section 8.02.


 






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(b)                                 In the event
any Notifying Party is made a defendant in or party to any claim instituted by
any third party for which the Notifying Party may be entitled to
indemnification under Section 8.02, the Notifying Party shall give the
Indemnifying Party prompt notice thereof. The failure to give such notice shall
not affect any Notifying Party’s ability to seek reimbursement unless, and only
to the extent that, such failure has a detrimental effect on the Indemnifying
Party’s ability to defend successfully the claim. The Indemnifying Party shall
be entitled to contest and defend such claim, provided that the Indemnifying
Party: (i) has a reasonable basis for concluding that such defense may be
successful; and (ii) diligently contests and defends such claim.


 


(c)                                  Notice of the
intention so to contest and defend shall be given by the Indemnifying Party to
the Notifying Party within fifteen (15) business days after the Notifying
Party’s notice of such claim. The Indemnifying Party shall use reputable
attorneys of its choosing to conduct such contest and defense. The Notifying
Party shall be entitled at any time, at its own cost and expense (which expense
shall not constitute a Loss for which the Notifying Party can be indemnified
under Section 8.02), to participate in such contest and defense and to be
represented by attorneys of its own choosing. The Notifying Party shall give
the Indemnifying Party notice that it intends to participate in such contest
and defense.


 


(d)                                 If the
Notifying Party elects to participate in such defense, the Notifying Party
shall cooperate with the Indemnifying Party in the conduct of the defense.
Whether or not the Notifying Party elects to participate in such defense,
neither the Notifying Party nor the Indemnifying Party may concede, settle or
compromise any claim without notifying the other Party and without the
Indemnifying Party’s consent if the settling party is the Notifying Party,
which consent shall not be unreasonably withheld.


 


(e)                                  Notwithstanding
any provision in this Agreement to the contrary, if: (i) a claim from a
third party seeks relief in the form of a material obligation of the Notifying
Party other than an obligation to pay monetary damages; (ii) the subject
matter of a claim relates to the ongoing business of the Notifying Party, which
claim, if decided against the Notifying Party, would adversely effect the
ongoing business (including, without limitation, requiring any material change
in the business practices of the Notifying Party) of the Notifying Party; or
(iii) the Notifying Party would not be fully indemnified under Section 8.02
or released with respect to such claim, then, in each such case, the Notifying
Party shall be entitled to contest and defend such claim, the expense of which
shall constitute a Loss for which the Notifying Party can be indemnified under
Section 8.02 (and the Indemnifying Party may participate); provided, however, that any
settlement or compromise shall require the consent of the Indemnifying Party,
which consent shall not be unreasonably withheld, and, if the Notifying Party
does not contest and defend such claim, the Indemnifying Party shall then have
the right to contest and defend (but not settle) such third party claim.


 






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(f)                                    Any dispute
between the Parties about the applicability of any Party’s indemnification
rights or obligations under Section 8.02 or the method of asserting claims
under this Section 8.03 shall be resolved in accordance with the dispute
resolution provisions set forth in Article IX.


 


SECTION 8.04
Limitations on Indemnification. Except as set forth in
Article IX, the rights set forth in Section 8.02 shall be each
Party’s sole and exclusive remedies against the other Party hereto for any
losses. No Party shall be entitled to any recovery under this Agreement for its
own special, consequential, incidental or punitive damages. The limitations set
forth in this Section 8.04 shall not apply to any losses that have resulted
proximately from any fraudulent act of the Indemnifying Party or its directors,
officers, employees, agents or representatives.


 


SECTION 8.05
Insurance. During the term of this Agreement, the
Parties shall each maintain adequate insurance related to the operation of
their respective businesses and their respective obligations under this
Agreement. CCRX shall provide and maintain the following insurance which will
be primary to any insurance carried by MHRX: (a) Commercial General
Liability insurance in limits of one million dollars ($1,000,000) bodily injury
and property damage per occurrence, including contractual liability to cover
CCRX’s obligations under Articles VIII and IX of this Agreement; and
(b) Workers; Compensation and Employer’s Liability Insurance. CCRX shall
provide certificate of insurance to MHRX for each line of coverage set forth
herein above. CCRX’s required insurance certificates shall require CCRX’s
insurer to provide MHRX with thirty (30) days prior written notice of any
cancellation or material change in the insurance policies and shall further
specify the contractual and additional insured requirements as set forth in
this SECTION 8.05.


 


ARTICLE
IX


DISPUTE RESOLUTION


 


SECTION 9.01
Disputes. This Article IX sets forth the sole
source of remedies available to the Parties with regard to any and all disputes
between them arising in connection with this Agreement (hereinafter referred to
as “Disputes”) including all questions of arbitrability, the existence,
validity, scope or termination of this Agreement or any term thereof; provided, however,
that the Parties agree that money damages may not be an adequate remedy for any
breach of the provisions of this Agreement and that a Party may, in its
discretion, apply to a court of law or equity of competent jurisdiction located
in a venue set forth in Section 11.09 for specific performance and
injunctive relief in order to enforce or prevent any violations of this
Agreement and any Party against whom such proceeding is brought hereby waives
the claim or defense that such Party has an adequate remedy at law and agrees
not to raise the defense that the other Party has an adequate remedy at law.


 






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SECTION 9.02
Commencing Arbitration. The Parties shall work
together in good faith to resolve any and all Disputes. Either party may submit
a dispute which the parties have been unable to satisfactorily resolve among
themselves to the American Arbitration Association for binding arbitration by
providing the other party with written notice of its intent to arbitrate.
Within thirty (30) days following the date one Party sent written notice of its
intent to arbitrate the Dispute to the other Party, such Party must submit the
Dispute to binding arbitration in accordance with the American Arbitration
Association Commercial Arbitration Rules, as they may be amended from time to
time (see http://www.adr.org). The party initiating the arbitration shall have
the obligation, initially, to pay any and all filing fees. Any party initiating
a counterclaim shall have, initially, to pay any filing fees for such
counterclaims. Any arbitration proceeding under this Agreement shall be
conducted in Cuyahoga County, Ohio. The arbitrator(s) may construe or
interpret but shall not vary or ignore the terms of this Agreement and shall be
bound by controlling Law. The arbitrator(s) shall have no authority to award
special, consequential, incidental or punitive damages.


 


SECTION 9.03
Decision Binding; Federal Arbitration Act. The decision
of the arbitrator(s) regarding the Dispute and any fees, including but not
limited to filing fees, reasonable attorney fees and expenses, expenses of the
arbitrators and costs, will be binding, and judgment on the award may be
entered in any court having jurisdiction thereof. The Parties acknowledge that
because this Agreement affects interstate commerce, the Federal Arbitration Act
applies.


 


SECTION 9.04
Waiver; Survival. In the event any court
determines that this arbitration procedure is not binding or otherwise allows
litigation involving a Dispute to proceed, the Parties hereby waive any and all
right to trial by jury in, or with respect to, such litigation. This
Article IX shall survive any termination of this Agreement.


 


ARTICLE
X


DEFINITIONS


 


SECTION
10.1 Defined Terms. When each of the following
terms is used in this Agreement it shall have the meaning stated below:


 


“Affiliate” with respect to any Person
means a Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the first
mentioned Person.


 


“Confidential Information” means
information about a Party’s customers, business practices and procedures, and
the proprietary business information of a Party.


 


“Contract” means any written or oral
contract, agreement, commitment, insurance policy, arrangement or
understanding.


 


“Enrollee” or “Part D Enrollee” means each
eligible persons enrolled directly, or indirectly, in a MHRX-sponsored PDP.


 






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“Governmental Authority” means any
government or political subdivision thereof, whether federal, state or local
(including counties and cities), or any court, agency, commission, department,
district, or other instrumentality of any such government or political subdivision.


 


“Law” means the common law and any
statute, ordinance, code or other law, rule, regulation, order, standard,
requirement or procedure enacted, adopted, promulgated, applied or followed by
any Governmental Authority with proper jurisdiction over the Parties, or the
activities of the Parties.


 


“Medicare Program” means, collectively, the
programs created by Congress in the Act, including without limitation, the
implementation of the Medicare Part D Prescription Drug Benefit Program,
including any regulations or CMS pronouncements and any future amendments.


 


“Parties” means MHRX and CCRX.


 


“Person” means an individual,
corporation, partnership, association, limited liability company, trust,
unincorporated organization, Governmental Authority or other entity or group
(as defined in Section 13(d) of the Securities Exchange Act of 1934,
as amended).


 


ARTICLE
XI


GENERAL PROVISIONS


 


SECTION 11.01
Notices. All notices and other communications given
or made pursuant to this Agreement shall be in writing and shall be deemed to
have been duly given or made as of the date delivered, mailed or transmitted to
the other party’s facsimile number, and shall be effective upon receipt, if
delivered personally, the next business day if sent by traceable overnight express
courier, charges prepaid, or, if mailed, five (5) days after deposit with
the United States Postal Service, certified mail, return receipt requested,
postage prepaid, to the Parties at the following addresses (or at such other
address for a Party as shall be specified by like changes of address) or upon
receipt if sent by electronic transmission to the facsimile number specified
below (provided a confirmation copy is sent by traceable overnight express
courier, charges prepaid):


 


If to MHRX:


Jane
C. Koehl-Colling, Esq.


MemberHealth, Inc.


29100
Aurora Road, Suite 301


Solon,
OH 44139


Facsimile:
440-248-4734


 






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If
to CCRX:


John
Rector, Esq.


Community
Care Rx, L.L.C.


100
Dangerfield Road


Alexandria,
VA 22314


Facsimile:                    


 


SECTION 11.02
Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.


 


SECTION 11.03
Severability. If any term or other provision of this
Agreement is finally adjudicated by a court of competent jurisdiction to be
invalid, illegal or incapable of being enforced by any Law, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties shall negotiate in
good faith to modify this Agreement, as the case may be, so as to effect the
original intent of the Parties as closely as possible in an acceptable manner
to the end that transactions contemplated hereby are fulfilled to the extent
possible.


 


SECTION 11.04
Entire Agreement. This Agreement (together
with any Attachments, Exhibits and Schedules hereto and thereto) constitute the
entire agreement of the Parties and supersede all prior agreements and
undertakings, both written and oral, between the Parties with respect to the
subject matter hereof. Each Party acknowledges that nothing in this Agreement
or any other materials presented to such Party in connection with the
transaction contemplated by this Agreement constitutes legal or tax advice to
such Party. The Parties have consulted such legal and tax advisors as they, in
their sole discretion, have deemed necessary or appropriate in connection with
this Agreement.


 


SECTION 11.05
Assignment. Except as permitted by Section 5.06 above,
neither Party may assign its rights or delegate its duties under this
Agreement, whether by operation of law or otherwise, without the other Party’s
prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed. Notwithstanding the above, it shall not be unreasonable
for a Party to withhold its consent if the proposed assignee is a competitor of
the Party whose consent is sought or in the event that such proposed assignee’s
business practices are inconsistent with the Guiding Principles attached hereto
as Attachment 4 and incorporated by reference herein. CCRX
acknowledges that MHRX is contemplating a private financing opportunity to be
completed by the end of calendar year 2005 which may or may not entail the
restructuring of the MHRX entity. CCRX agrees in advance that no consent shall
be required for this particular financing opportunity.


 


SECTION 11.06
Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each Party and their respective
successors and permitted assigns, and nothing in this Agreement, or sale or
change of control of a Party, shall affect this Agreement or the enforceability
of this Agreement. The terms of this Agreement shall


 






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apply
to the Parties and all Affiliates and subcontractors of the Parties and upon
change of control of either Party, shall apply to such acquirer and all
Affiliates of the acquirer.


 


SECTION 11.07
Construction of Terms. Whenever used in this
Agreement, a singular number shall include the plural and a plural the
singular. Pronouns of one gender shall include all genders. References herein
to articles, sections, paragraphs, subparagraphs or the like shall refer to the
corresponding articles, sections, paragraphs, subparagraphs or the like of this
Agreement, as the case may be. The words “hereof,” “herein,” and terms of
similar import shall refer to this entire Agreement. Whenever used in this
Agreement, the use of the terms “including,” “included,” “such as,” or terms of
similar meaning, shall not be construed to imply the exclusion of any other
particular elements.


 


SECTION 11.08
No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against any Party.


 


SECTION 11.09
Governing Law; Jurisdiction; Waiver of Jury Trial.


 


(a)                                 Except to the
extent that each of the Parties is governed by the Laws of its domiciliary
state, this Agreement shall be construed and enforced in accordance with the
internal Laws of the State of Ohio.


 


(b)                                The
jurisdiction and venue for any request, motion or other action for injunctive
relief, specific performance and other equitable relief brought by any Party
hereto pursuant to this Agreement shall properly lie in any federal court of
competent jurisdiction located in Cleveland, Ohio. By execution and delivery of
this Agreement, each Party hereto irrevocably submits to the exclusive
jurisdiction of such courts for itself and in respect of its property with
respect to such action. The Parties irrevocably agree that venue would be
proper in such court, and hereby waive any objection that such court is an
improper or inconvenient forum for the resolution of such action. The Parties
further agree that the mailing by certified or registered mail, return receipt
requested, of any process required by any such court shall constitute valid and
lawful service of process against them, without necessity for service by any
other means provided by statute or rule of court.


 


SECTION 11.10
Amendment. This Agreement may not be amended except by an instrument in
writing signed by the Parties, except that in the event that this Agreement or
any Exhibit does not contain a particular provision required by the Laws
governing the Part D program, or any provision of this Agreement or an
Attachment, Exhibit or Schedule conflicts with such Laws or regulations,
then this Agreement and any Exhibits, Attachments or Schedules as applicable,
shall be deemed amended to comply with the Laws governing the Part D
program and any conflicting provision shall be deemed stricken and such
amendment shall be effective immediately upon the date that such Law becomes
effective.


 






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SECTION 11.11
Waiver. At any time a Party may (a) extend the
time for the performance of any of the obligations or other acts of the other
Party, (b) waive any inaccuracies in the representations and warranties of
another Party contained in this Agreement or in any document delivered pursuant
to this Agreement and (c) waive compliance by the other Party with any of
the agreements or conditions contained in this Agreement. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the Parties. It is agreed that no delay or omission to exercise any right,
power or remedy accruing to any Party, upon any breach, default or
noncompliance by any other Party under this Agreement shall impair any such
right, power or remedy, nor shall it be construed to be a waiver of any such
breach, default or noncompliance, or any acquiescence therein, or of or in any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind or character on
any Party’s part of any breach, default or noncompliance under this Agreement
or any waiver on such Party’s part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies under this Agreement
afforded to either Party shall be cumulative and not alternative.


 


SECTION 11.12
Force Majeure. Neither party shall be liable to the other Party
for a delay in performance or failure to perform due to causes beyond its
reasonable control including, but not limited to acts of God, acts of the other
Party, acts (including the failure to act) of any governmental authority,
governmental priorities, strikes or other labor difficulties, terrorism, fire,
floods, sabotage, earthquakes, storms, epidemics, wars, riots or delays in
transportation. A Party to whom this Section is applicable shall notify
the other Party, as promptly as possible, of any delay or failure so excused
and shall specify a revised date of performance of its obligations as soon as
reasonably possible.


 


SECTION 11.13
Independent Contractor Status. Each Party’s association
with the other is that of an independent contractor. Both CCRX and MHRX
disclaim any desire or intention to create an employer-employee relationship
between the other’s employees and its own. No employee of a Party shall have
any entitlement to benefits provided by the other Party to its employees. This
Agreement shall not constitute, give effect to, or otherwise imply a joint
venture, partnership, or business organization of any kind. Each party is an
independent party and shall not act as an agent of the other party for any
purpose.


 


SECTION 11.14
Counterparts. This Agreement may be executed via facsimile in one
or more counterparts, and by the Parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.


 






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IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of
the date first written above by their respective officers duly authorized.


 


 


	
  Community Care RX L.L.C.

  	
  MemberHealth, Inc.

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Bruce Roberts

  	
   

  	
  By:

  	
  /s/
  Charles E. Hallberg

  
	
   

  	
  Signature                                      Date
  10/21/05

  	
   

  	
  Signature                                      Date
  10/21/05

  
	
   

  	
   

  
	
  Printed
  Name:

  	
  Bruce
  Roberts

  	
   

  	
  Printed
  Name:

  	
  Charles
  E. Hallberg

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chairman

  	
   

  	
  Title:

  	
  President
  & CEO

  
										



 






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ATTACHMENT 1


 


Statement of Work (“SOW”)


 


Between


 


MemberHealth, Inc.


 


And


 


Community Care Rx, LLC (“CCRx”)


 


October 21, 2005


 


MemberHealth, Inc.
(“MemberHealth”) has been awarded a contract with the Centers for Medicare and
Medicaid Services (“CMS”), the administrator of the Medicare program, to offer,
and be the sponsot of, an outpatient prescription drug insurance benefit to
eligible Medicare beneficiaries for the 2006 Coverage Year.
As set fourth in such application, MernberHealth has developed and intends to-implement-and operate a Medicare Prescription Drug Plan
that will offer-private outpatient prescription drug benefit
plans (“PDPs” or  “Part D Plans”) to eligible Medicare beneficiaries under Part D of the Medicare program (the “Part D
Program”). Part D Plans are authorized under  the federal Medicare Prescription Drug
Improvement and Modernization Act of 2003 (the “MMA”) and the Part D
implementing regulations at 42CFR Part 423 (the “Part D Regulations”). In
order to offer Part D Plan benefits for a particular Calendar year (i.e., Coverage
Year), a PDP Sponsor must submit to CMS a bid for each Part D Plan that if
intends to offer by the first Monday of June of the year prior to the
applicable Coverage Year. If the PDP Sponsor’s bid is accepted, the PDP Sponsor
will begin to market and enroll Medicare beneficiaries in the Fall immediately
prior to the applicable Coverage Year and the Part-D-Plan benefits will become effective as of the beginning of such
Coverage Year. For purposes of this SOW, the Prime Contract means the contract
between CMS and MemberHealth
setting forth the terms and
conditions under which MemberHealth may offer a PDP Plan. For purposes of this
SOW, MemberHealth Part D Plans shall mean those Part D Plans
sponsored by MemberHealth in the applicable PDP Regions pursuant to the terms
of this SOW and the Prime Contract(s).


 


Community
Care Rx LLC, a wholly owned subsidiary of the National Community Pharmacists
Association, (“CCRx”) desires to assist MemberHealth, and MemberHealth desires
the assistance of CCRx, to become a sponsor of one or more Part D Plans in
one or more of the geographic regions established by CMS for the purpose of
offering a PDP Plan, and to provide resources and certain assets in connection
therewith. Section 1 of this SOW addresses the responsibilities of. CCRx to MemberHealth prior to
the award of the Prime Contract, and Section 2 of this SOW addresses
CCRx’s scope of work after MemberHealth has been awarded a Prime Contract. Both
sections also contain responsibilities of MemberHealth to CCRx.


 






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CCRx
is aware that its parent company has been identified as a resource to provide
services/support under the Prime Contract. These services/support are
contingent upon the Subcontract between MemberHealth and CCRx with required
Prime Contract flow-down clauses and mutually acceptable terms and conditions,
and Contracting Officer approval, if required. Member Health will involve CCRx
as a fully integrated team member in the pursuit of this opportunity. CCRx will
license to MemberHealth the right to use certain of CCRx’s intellectual
property, including the trademarks “Community Care Rx” and “CCRx” to this
project as set forth below. Other sub-contractors to MemberHealth shall
include, but are not limited to, Computer Sciences Corporation (CSC) and other
vendors.


 


The
parties negotiated in good faith the terms of the Subcontract Agreement(s) consistent
with the terms and objectives of this SOW.


 


Section 1:
Pre-Award Responsibilities


 


1.          Drawing on CCRx’s extensive skills and
experiences in the pharmaceutical industry, CCRx will provide program support
to the MemberHealth team for purposes of negotiating and being awarded the
Prime Contract


 


2.          CCRx will proactively contribute leadership
and expertise to satisfy the applicable requirements outlined in the Part D
Regulations as they relate to marketing efforts by CCRx’s member pharmacies


 


3.          CCRx will use its relationships with
community based pharmacists, pharmacy chains, and industry associations to both
satisfy the terms and conditions of the applicable application guidelines and
to maximize the potential of success of the program.


 


4.          CCRx will proactively contribute leadership
and insights regarding pricing strategies so that the MemberHealth Part D
Plans are (and remain) competitive and represent good value to the Medicare
beneficiary population.


 


5.          CCRx shall provide certain valuable intellectual
property and assets to MemberHealth for purposes of the
MemberHealth Part D Plans, including a license to use the CCRx name and the
mark Community Care Rx (the “Mark”) in connection with the MemberHealth Part D
Plans.  MemberHealth shall use the Mark
exclusively as the primary brand for the MemberHealth Part D Plans, and
shall use no secondary branding for the MemberHealth Part D Plans, except
as set forth in the Subcontract. Furthermore, all contracts between
MemberHealth and other third parties in connection with the MemberHealth Part D
Plans shall require that the subcontractor(s) abide by the MemberHealth Part D
Plans Branding Parameters. CCRx and MemberHealth shall work collaboratively to
develop marketing, promotional, and operational materials necessary to
administer the MemberHealth Part D Plans. Final approval of all material
will be subject to the Part D Regulations, 
as well as approval by CCRx and MemberHealth. MemberHealth will be the
sole point of contact with CMS regarding the approval process to execute the
Prime Contract. MemberHealth shall advise CCRx of all relevant communications
with CMS related to the MemberHealth Part D Plans and the application
therefore Ownership of the Mark shall remain with CCRx


 






*** Material has been omitted
pursuant to a request for confidential treatment and filed separately with the
SEC.


 


2

















 


6.          CCRx will assume a leadership role in
establishing the strategy of developing plan design(s) for the Medicare
beneficiaries that embrace the Guiding Principals set forth on Exhibit A
hereto.


 


7.          CCRx will provide the technical approach to
be employed to the design and implementation of a mechanism to administer
Medication Therapy Management (MTM) services. The focus of these services will be to mitigate drug costs
for the MemberHealth Part D Plans and to provide for the well being of
beneficiaries. The MemberHealth Part D Plans will be designed to
incorporate other objectives, as determined by CMS. The primary mechanism to deliver
MTM services will be through community pharmacists. CCRx will work with MemberHealth
to develop a schedule of payments to pharmacists as compensation for their
services.


 


Section 2:
Post Award Scope of Work


 


1.          CCRx shall take appropriate measures to
assure that all data regarding Medicare beneficiaries and their consumption of
pharmaceuticals made available to CCRx and shall be only used in accordance
with the data use agreement promulgated by CMS, HIPAA rules and regulations,
and the terms of the MemberHealth Business Associate Agreement (a copy of which
shall be provided to CCRx). MemberHealth shall provide CCRx in a timely manner with
all data, data dictionaries, and test data necessary, as determined by CCRx and
MHRX, to provide the services required of CCRx, it being acknowledged by MemberHealth
that the  timely
delivery of sufficient data is a prerequisite to CCRx’s performance hereunder.
MemberHealth shall provide CCRx in a timely manner applicable periodic reports
relative to claims processing to support CCRx role in the Member-Health Part D Plans. The MemberHealth Business Associate Agreement
shall permit all use of such data required to perforn CCRx’s responsibilities
under the Subcontract CCRx will contribute the hardware and communications
infrastructure to support the MTM services.


 


2.          CCRx will participate as a fully integrated
team member and assume a leadership and  management role in the following four areas: (1) Sales
and marketing to the pharmacy community; (2) Market Research; (3) Medication
Therapy Management Services; and (4) Communications and Public Relations
except those directed at the beneficiary market In areas (2) through (4) herein
above, CCRx will manage the function and will be the point of contact to the
Provider market for the Plans. In area (1), the parties will collaborate as a
team in a manner calculated to obtain optimal results. CCRx and MemberHealth
agree that it is necessary to mutually develop service level agreements
(“SLAs”) in order to measure the performace of CCRx’s responsibilities under
this Section 2(2). CCRx and MemberHealth, through the FMT, shall develop
and mutually agree upon a set of SLAs that are consistent with the intent of
this Agreement and that will permit each party to realize the benefits that it
bargained for under. the
Subcontract.


 


3.          CCRx will encourage the support of community
retail pharmacies to participate and endorse the MemberHealth Part D
Plans.


 


4.          In administering the MemberHealth Part D
Plans during the term of the Subcontract and for so long as MemberHealth is
using the Mark, MemberHealth shall abide by the Guiding


 






*** Material has been omitted
pursuant to a request for confidential treatment and filed separately with the
SEC.


 


3

















 


Principles
attached to the Subcontract as Attachment 4. The Guiding Principles may be
amended from time to time with the consent of both CCRx and MemberHealth


 


5.          The MemberHealth Part D Plans shall be
administered at all times in a manner such that (i) there shall be an open
pharmacy network (i e , no preferred network, no preferred pricing, and no
co-pay differentials), (ii) there shall be no mail order component to the
MemberHealth Part D Plans unless agreed to by CCRx and MernberHealth. CCRx
shall have the right to review any and all pharmacy reimbursement and/or
pharmacy professional fee formulas or methodologies applicable to the pharmacies
and any changes made thereto in the future (“Pharmacy Methodologies”). Should
CCRx, at its sole discretion, decide that Pharmacy Methodologies are
inconsistent with its mission, it may terminate the Subcontract without
penalty.


 


6.          CCRx shall contribute to the monitoring of
performance so that MemberHealth is compliant with the terms of the Service
Level Agreements described by CMS as their parameters of the successful
performance of a Prescription Drug Plan.


 


7.          CCRx shall contribute leadership and insights
regarding pricing strategies so that Member-Health’s
offering remains competitive and represents good value to the Medicare
beneficiary population.


 


8.          CCRx shall monitor the performance of drug
spending levels and play a leadership role to managing the MTMS portion of the MemberHealth
Part D Plans in order that desired spending levels are achieved. CCRx shall
create and distribute information and training  materials to transform the retail pharmacist
into a program risk manager.


 


9.          CCRx agrees to participate in the
MemberHealth Part D Plans through at least the 2010 Coverage Year pursuant
to the Subcontract.


 


10.    CCRx will
abide by all Federal and State laws and regulations and CMS instructions, State
and Federal privacy and security requirements (42CFR 423.136), audit
requirements (42CFR 423.505) and acknowledges that beneficiaries are not held
liable for fees that are the responsibility of the PDP Plan Sponsor


 


11.    CCRx acknowledges
that MemberHealth, as the PDP Plan Sponsor, retains the right to approve,
suspend, or terminate any arrangement with a pharmacy and that MemberHealth
will be monitoring CCRx’s performance, on an ongoing basis only upon one of the
following events:


 


(1)   Pharmacy’s license,
certification or accreditation necessary to perform any services contemplated
by this Agreement is suspended, revoked, restricted, or placed on provisional
or probational status (either voluntarily or involuntarily), or Pharmacy is no
longer Medicare-eligible, Medicaid-eligible, or eligible to participate in any
other government program;


 


(2)   Pharmacy’s liability
coverage as required under this Agreement is reduced below required amounts or
is no longer in effect;


 






*** Material has been omitted
pursuant to a request for confidential treatment and filed separately with the
SEC.


 


4

















 


(3)   At any time, Pharmacy fails
to meet CCRx quality management or utilization management criteria;


 


(4)   CCRx or MemberHealth makes a
reasonable and good faith determination that termination is necessary in order
to protect the health or welfare of plan beneficiaries.


 


(5)   Pharmacy ceases to actively
perform its business or dissolves;


 


(6)   Pharmacy is unable to pay
its debts in the ordinary course of business;


 


(7)   Pharmacy files a petition in
bankruptcy or an involuntary petition is filed against Pharmacy that is not
dismissed within forty-five (45) days of the filing;


 


(8)   The Department of Insurance
or other state or federal agency with jurisdiction over MemberHealth or Pharmacy
determines that it is improper for Pharmacy to provide services in accordance
with this Agreement and the parties cannot agree upon an acceptable addendum to
this Agreement within a time frame acceptable to the applicable state or
federal agency or within fifteen (15) days after the determination of the
agency, whichever is sooner.


 


12.    CCRx agrees to provide any reports or information for
reports that are required under the resaltant contract that may be reasonably be expected to produce given
the data to which it has access.


 


13.    CCRx agrees
to make its books and other
records available in accordance with 42 CFR §423 505(i)(2), which generally
gives the Department of Health and Human Services, the Comptroller General, or
their designees the right to inspect.


 


14.    CCRx
understands that MemberHealth, as the Part D Plan Sponsor may delegate an
activity or responsibility to CCRx, that such activity or responsibility may be revoked if CMS or MemberHealth,
as the Part D Plan Sponsor, determines CCRx has not performed
satisfactorily The Subcontract includes mutually acceptable remedies and
escalation procedures in lieu of revocation to address this requirement All
responsibilities with respect to the MemberHealth Part D Plans that are
not explicitly subcontracted to CCRx in the Definitive Agreement are the
responsibility of MemberHealth.


 


15.    The
relationship between the parties, as well as the subcontracting relationship
between MemberHealth and CSC, shall be exclusive with respect to providing ding
insurance under Medicare Part D.


 


16.    MemberHealth’s
license to use the Mark is restricted to the exclusive primary branding of the Part D Program under the
relationship between MemberHealth and CCRx as outlined in the Subcontract.
MemberHealth’s license to use the Mark will cease immediately upon termination
of the Subcontract pursuant to the terms set forth in the Subcontract.


 


17.    Compensation to CCRx will be based on the following:


 






*** Material has been omitted
pursuant to a request for confidential treatment and filed separately with the
SEC.


 


5

















 


A.            A schedule of labor categories will
be established. Each labor category will have an agreed hourly billing rate.
This rate will be established by CCRx and approved by MemberHealth. The hourly
rate will include direct salary, overhead, fringe benefits and other
considerations as is customary. The rates shall be established with the duel
objective of just and fair compensation coupled with an intent to offer a
competitive solution to the client. Separate actual budgets for Marketing and
MTM services which consider costs incurred by CCRx prior to award as well as go
forward costs will be set by the parties.


 


B             The Marketing budget for CCRx,
which will be set forth in final detail in Exhibit A hereto, is estimated
by the parties to be between  
***   . The actual Marketing budget for CCRx will
reflect the Parties’ agreement on the true anticipated Marketing expenses,
including any markup, in order to meet the SLAs.


 


C.    The MTM budget for CCRx, which will be set
forth in detail in Exhibit B hereto, is estimated by the parties to be an
amount not to exceed   ***   .
The actual MTM budget for CCRx will reflect the Parties’ agreement on the true
anticipated MTM expenses, in order to meet the SLAs. It is the intent of the
parties that MemberHealth shall pay for the actual costs of all MTM expenses in
accordance herewith, and all such budgets shall be designed and amended to
achieve this intent.


 


D.      
***   .


 


E.     The parties agree to provide commercially
reasonable resources in support of the application process and
subsequent ancillary activities necessary to be approved by CMS as  a PDP Plan Sponsor. MemberHealth has the lead for proposal development
and contract program management. Each party shall beat their respective cost
for annual application development (proposal phase). MemberHealth understands and
agrees that while CCRx shall not endorse any other Medicare Prescription Drug Plans,  all pharmacy members of CCRx shall make individual decisions regarding
their participation in any Part D Plan.


 


[Remainder of Page Intentionally Left Blank]


 






*** Material has been omitted
pursuant to a request for confidential treatment and filed separately with the
SEC.


 


6

















 


ACCEPTANCE:


 


IN
WITNESS WHEREOF THE PARTIES HERETO HAVE EXECUTED THIS STATEMENT OF WORK AS OF
THE DATES SET FORTH BELOW:


 


	
  COMMUNITY
  CARE RX LLC

  	
  MEMBERHEALTH,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Bruce Roberts

  	
   

  	
  By:

  	
  /s/ Charles E. Hallberg

  	
   

  
	
   

  	
  Signature                                               Date
  10/21/05

  	
   

  	
  Signature                                               Date
  10/21/05

  
	
   

  	
   

  
	
  Typed Name:

  	
  Bruce Roberts

  	
   

  	
  Typed Name:

  	
  Charles E. Hallberg

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chairman

  	
   

  	
  Title:

  	
  President & CEO

  	
   

  
											



 






*** Material has been omitted
pursuant to a request for confidential treatment and filed separately with the
SEC.


 


7
















 


ATTACHMENT
2


 


COMPENSATION


 


   ***   






*** Material has been omitted pursuant to a
request for confidential treatment and filed separately with the SEC.


 

















 


BUSINESS ASSOCIATE AGREEMENT


 


THIS BUSINESS ASSOCIATE AGREEMENT (“Agreement”) is entered
into as of October 21st, 2005, by and between MemberHealth, Inc., an Ohio corporation (“Covered Entity”), and Community Care Rx, LLC, a Delaware
limited liability company (“Business Associate”)


 


RECITALS


 


A.                                   Covered Entity
is a covered entity, as that term is defined by HIPAA;


 


B.                                     Covered Entity
has engaged Business Associate to perform on behalf of Covered Entity the
services (“Services”) described in that certain
Subcontract Agreement between the parties, dated as of the date hereof (such
Subcontract Agreement and any and all agreements between the parties relating
to the provision of the Services shall be referred to as the “Underlying Agreement(s)”), and, in the course of providing
the Services, Business Associate is likely to obtain and/or maintain, use, or
disclose Protected Health Information (as defined below) provided to it by
Covered Entity; and


 


C.                                     The parties
desire to enter into this Agreement in compliance with the business associate
agreement requirements of HIPAA;


 


NOW, THEREFORE, the parties do hereby agree as follows:


 


1.                                      Definitions.


 


1.1.                            “HIPAA” shall mean the
Health Insurance Portability and Accountability Act of 1996 and its
implementing regulations (45 C.F.R. Parts 160-164).


 


1.2.                            “Patient” shall mean an
individual who is participating in, has participated in, or has been the
recipient of; any program or service of Covered Entity.


 


1.3.                            “Patient
Information” shall mean (a) PHI and (b) information
relating to an individual who is or has been a Patient of Covered Entity and
which Covered Entity has determined does not identify, or cannot reasonably be
linked to the identity of, individuals who are or have been Patients of Covered
Entity, including, without limitation, information in raw, aggregated,
stripped, or masked form


 


1.4.                            “Protected
Health Information” or “PHI” shall
mean any information relating to the healthcare of a Patient that contains
information that identifies, or can reasonably be linked to
the identity of, such Patient


 






*** Material has been omitted pursuant to a
request for confidential treatment and filed separately with the SEC.


 

















 


2.                                      Patient
Information.


 


2.1.                            Obligations
of Covered Entity. Covered Entity hereby
agrees that it:


 


(a)                                  Will promptly
notify Business Associate in writing of any restrictions that Covered Entity
has agreed to regarding the use and disclosure of PHI that may affect Business
Associate’s ability to provide the Services or to perform its obligations under
this Agreement.


 


(b)                                 Will promptly
notify Business Associate in writing of any change in, or revocation of,
permission by a Patient to use or disclose his or her PHI, if such change or
revocation may affect Business Associate’s ability to provide the Services or
to perform its obligations under this Agreement.


 


2.2.                            Obligations
of Business Associate. Business Associate
acknowledges and agrees that it is considered a “Business Associate” as defined
by HIPAA. As a Business Associate of Covered Entity, Business Associate shall,
in addition to complying with the other terms and conditions of this Agreement,
comply with the HIPAA-required provisions set forth in this Section.


 


(a)                                  Disclosure. Business
Associate shall not use or further disclose PHI other than as permitted or
required by this Agreement, or as required by law or as expressly consented to by
Covered Entity in writing.


 


(b)                                 Safeguards. Business
Associate shall use appropriate safeguards to prevent use or disclosure of PHI
other than disclosures permitted or required by this Agreement and to protect
the confidentiality, integrity, and availability of electronic PHI


 


(c)                                  Reporting. Business
Associate shall report to Covered Entity any attempted or successful access, use, disclosure,
modification, or destruction of PHI not permitted or required by this Agreement
of which it becomes aware. Business Associate shall, to the extent practicable,
mitigate any harmful effect that is known to Business Associate of a use or disclosure
of PHI by Business Associate in violation of this Agreement.


 


(d)                                 Patient Rights. Business
Associate hereby represents that it shall not create, collect, compile, or
maintain PHI in any form in connection with the Services provided pursuant to
this Agreement, except that Business Associate may maintain an exact duplicate
of the Protected Health Information maintained by Covered Entity. If Business
Associate maintains an exact duplicate of PHI, Business Associate represents
that it will not amend, supplement, delete any part of, revise, or otherwise
alter the PHI except as requested by Covered Entity to the extent necessary to
conform to the Designated Record Set maintained by Business Associate.


 


(e)                                  Inquiries. In addition
to complying with the provisions of Section 2.2(d) above, if any Patient
submits to Business Associate an oral or written request with respect to
Patient Information, including, without limitation, a Patient requesting access
to, amendment of, or an accounting of disclosures of PHI, Business Associate
shall notify Covered Entity of the details of such request within ten (10)
calendar days of receiving the request. Following receipt of such notice,
Covered Entity shall be responsible for responding to such request.


 






*** Material has been omitted pursuant to a
request for confidential treatment and filed separately with the SEC.


 


2

















 


(f)                                    Management and
Administration. Except as otherwise limited in this Agreement,
Business Associate may use PHI in providing Services under the underlying
Agreements, as necessary for the proper management and administration of
Business Associate, or to carry out the legal responsibilities of Business
Associate, provided that such use would not violate HIPAA if done by Covered
Entity. Business Associate shall limit the use or disclosure of the PHI to only
those entities, individuals, or classes of individuals who perform; or assist
Business Associate in the performance of, the Services. Business Associate will
take all reasonable steps necessary to make its personnel to whom it discloses
PHI in accordance with this Agreement aware of the provisions of this Agreement
relating to the confidentiality and safeguarding of the PHI. Business Associate
shall require that any agents and subcontractors to whom it provides PHI as
permitted or required under this Agreement agree, in writing, prior to the disclosure
of such PHI, to the same restrictions and conditions that apply to Business
Associate with respect to such PHI, including without limitation the provisions
of this Section 2 2.


 


(g)                                 Audit. Business
Associate shall make its internal practices, books, and records relating to the use and
disclosure of PHI received front, or created or received by Business Associate
on behalf of, Covered Entity available to the Secretary of Health and Human
Services or to Covered Entity, upon request, for purposes of determining and
facilitating Covered Entity’s compliance with HIPAA.


 


(h)                                 Termination for
Failure to Comply. Covered Entity may immediately terminate this
Agreernent and any and all Underlying Agreement(s) if Covered Entity
determines that Business Associate has materially breached this Section 2.2; provided
however, Covered Entity shall first provide Business Associate a reasonable
opportunity to cure the breach. If Business Associate is timely (but no less
than thirty (30) days) able to cure the breach to the reasonable satisfaction
of Covered Entity, this Agreement shall remain in full force-and effect.


 


(i)                                     Duties Upon
Termination. At termination or expiration of the
Underlying  Agreement(s),
Business Associate shall return or destroy all PHI that Business Associate
still maintains in any form and retain no copies of the PHI. If return of
destruction is infeasible, Business Associate shall extend the protections of
this Agreement to the PHI and limit further uses and disclosures of the PHI to
the purposes that make such return or destruction infeasible.


 


2.3.                            Survival. The terms of Section 2.2(i) shall
survive the termination or expiration of this Agreement.


 


3.                                      Required
Disclosure. In the event Business
Associate receives a subpoena or other validly issued administrative or
judicial process requesting disclosure of PHI it receives under this Agreement,
Business Associate shall promptly notify Covered Entity to allow Covered Entity
time to challenge such disclosure. Unless the demand shall have been timely limited,
quashed or extended, Business Associate may disclose PHI to the extent required
by law.


 


4.                                      Compliance
with Laws. Business Associate shall
comply with all applicable federal, state, and local laws, rules and regulations,
including, without limitation, the requirements of HIPAA.


 






*** Material has been omitted pursuant to a
request for confidential treatment and filed separately with the SEC.


 


3

















 


5.                                      Amendment. The parties
shall amend this Agreement from time to time by mutual written agreement in
order to keep this Agreement consistent with any changes made to the HIPAA laws
or regulations in effect as of the date of this Agreement and with any new
regulations promulgated under HIPAA


 


6.                                      No
Third Party Benefit This Agreement is for the sole benefit of
the parties hereto and shall not confer or be deemed to confer any rights,
benefits, or claims upon any person or entity not a party to this Agreement.
Without in any way limiting the foregoing, it is the patties’ specific intent
that nothing contained in this Agreement gives rise to any right or cause of
action, contractual or otherwise, in or on behalf of the individuals whose PHI
is used or disclosed pursuant to this Agreement.


 


7.                                      Interpretation. This Agreement
shall be construed in accordance with and governed by the laws of the State of Ohio; provided,
however, that the conflicts of law principles of the State of Ohio shall not
apply to the extent that they would operate to apply the laws of another state
Terms not defined herein shall have the meaning set forth in HIPAA. To the
extent that the terms of this Agreement conflict with the provisions of any
Underlying Agreement, the terms of this Agreement shall control. Any ambiguity
in this Agreement shall be resolved in favor of a meaning that permits the
parties to comply with HIPAA.


 


8.                                      Counterparts. This Agreement
may be executed in two or more counterparts, each of which-shall -be-an
original, but all of which taken together shall constitute one and the same agreement.


 


IN WITNESS WHEREOF, the duly authorized
representatives of the parties have executed this Agreement as  of the date
first written above.


 


	
  MEMBERHEALTH,
  INC.

  	
   

  	
  COMMUNITY
  CARE RX, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Charles E. Hallberg

  	
   

  	
  /s/
  Bruce Roberts

  
	
  Signature

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Charles E. Hallberg

  	
   

  	
  Bruce Roberts

  
	
  Print
  Name

  	
   

  	
  Print
  Name

  
	
   

  	
   

  	
   

  
	
  President & CEO

  	
   

  	
  Chairman

  
	
  Title
  or office

  	
   

  	
  Title
  or office

  
	
   

  	
   

  	
   

  
	
  10/21/05

  	
   

  	
  10/21/05

  
	
  Date

  	
   

  	
  Date

  



 






*** Material has been omitted pursuant to a
request for confidential treatment and filed separately with the SEC.


 


4
















 


ATTACHMENT 4


 


GUIDING PRINCIPLES


 


Guiding
Principles for a PBM


 


Guiding Principle #1:  A PBM will provide a cost-
efficient benefit design that aligns the financial interests of consumers, plan
sponsors, PBMs, and pharmacists.


 


Supporting
Bullet Points:


 


·                  Full disclosure
of ALL sources of revenue to plan sponsors.


·                  Disclose 100%
of drug manufacturer rebates and all shared revenue arrangements between
manufacturers, PBM, and consumers (this must include service and admin fees
plus disclosures to financially supporting P-T and benefit design committees )


·                  Full disclosure of clinical
and cost data to prescribing physicians, dispensing pharmacists, and patients
as requested.


·                  No mandatory mail order or
financially incented mail order in the plan design


·                  Elimination of “Spread
Pricing”


·                  Pharmacist intervention to
drive utilization to the most cost-effective model


·                  Elimination of mail order
conflicts of interests


·                  Full audit rights consistent
with ERISA and Department of Labor


·                  Agree to serve
plan sponsors in a fiduciary role.


 


Description:


 


A
PBM will always provide the most cost effective and efficient benefit through
the examination of clinical information and alignment of financial interests.
Clinical leadership by pharmacists in the development of the formulary coupled
with pharmacists’ interventions to drive utilization to the most cost-effect
model will aid in the efficient benefit design. Moreover, in any contractual
relationship with its stakeholders, a PBM will provide details on financial
relationships with drug manufacturers (i.e. contracts) as well as its pharmacy
network to ensure that financial agreements are understood This transparency
includes full disclosure of manufacturer rebates to plan sponsors, information
sharing of reimbursement rates and/or prices to both retail pharmacy and plan
sponsors, and “right to audit” clauses in all contracts with stakeholders


 


Guiding Principle #2. A PBM will leverage the knowledge and
clinical expertise of community pharmacists to maximize the value of the
pharmacy benefit for its clients. Furthermore, a PBM will develop a payment
structure for community pharmacists which will reward them  for their 
innovative care services and recognize the true costs of providing those
services.


 






***
Material has been omitted pursuant to a request for confidential treatment and
filed separately with the SEC.


 

















 


Supporting
Bullet Points:


 


·                  Position the community
pharmacist as a value-added resource to both the patient and the plan sponsor
as opposed to a commodity resource for dispensing medication


·                  Provide incentives to local
pharmacists for health improvement and cost saving initiatives


·                  Leverage the community
pharmacist in alternative distribution services such as central fill and mail
order


·                  Incorporate fair
reimbursement based on benchmarks that are more reflective of true costs


·                  Pay for performance
incentives that reward pharmacists for dispensing cost efficient medications
should be incorporated into reimbursement methodologies.


·                  Provide opportunity to
pharmacists for other value added services such as medication therapy
management services.


 


Description:


 


A
PBM will leverage the community pharmacist to be the primary provider for its
clients’ pharmaceutical needs by providing incentives for health improvement
and health care cost savings. To accomplish this, a PBM will develop new and
innovative methodologies for pharmacist reimbursement that are fair,
transparent, and reflective of the true costs. This simplification will make it
clear to plan sponsors what their costs are, and that they are being based on
the specific payment to the network pharmacy and thereby eliminating spread
pricing.


 


Guiding Principle #3: A PBM will provide
consumer choice and empowerment to plan 
sponsors’ members through open network access and pharmacy benefit
education and consumer driven plan designs.


 


Supporting
Bullet Points:


 


·                  Access to retail pharmacies far beyond the
Medicare standard


·                  Help patients choose individual medications
through cost/benefit education of choices within therapeutic classes.


·                  Pharmacy benefit design that
encourages the rational utilization of pharmaceutical products


·                  Create consumer prices that
reflect the relative acquisition prices (net of rebates) of medications.


·                  Devise benefit designs where
consumers can share in drug manufacturer rebates at the point of sale


 


Description:


 


A
PBM will provide consumer choice and empowerment as a core part of its benefit
designs. First, consumers will have a wide choice of pharmacies that
participate on an equal access basis.


 






***
Material has been omitted pursuant to a request for confidential treatment and
filed separately with the SEC.


 

















 


Second,
consumers will be empowered to choose the medications that they, along with
their doctor and pharmacist, believe are best for them. They will make informed
choices about their medications through education and a thorough understanding
of the costs and benefits of different medications. This education will focus
on educating patients on generic products, similar products within the same
therapeutic class, and the cost-quality tradeoffs of different products.


 


Guiding Principle #4: A
PBM will recognize and educate stakeholders on the value of pharmaceuticals
in improving total health care outcomes and costs.


 


Supporting Bullet Points:


 


·                   Assume a
leadership role in educating plan sponsors and patients on improving health
outcomes through pharmaceuticals


·                  Study and report on pharmaceutical data
integrated with medical data that documents improved health outcomes and
savings


·                  Educate patients on the value of
pharmaceuticals within the overall context of their own health care


 


Description:


 


A
PBM will work with key stakeholders to educate plan sponsors and patients on
the tremendous value of pharmaceuticals in improving health outcomes. A PBM
will seek to be a leader within the health care industry in this regard.


 


Guiding Principle #5: A PBM will actively
support regulatory accountability and credentialing of PBMs


 


Supporting
Bullet Points:


 


·                  National and state full disclosure
initiatives


·                  Regulation of alternative distribution
services


·                  State licensing and registration of PBMs


·                  Support national credentialing standards


 


Description:


 


A
PBM will assume a leadership role within today’s “PBM” industry to develop and
maintain higher levels of business standards for PBMs. These standards
will include financial transparency, regulation of alternative distribution
services, state licensing, and national credentialing standards


 






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filed separately with the SEC.


 

















 


ASSIGNMENT AND ASSUMPTION AGREEMENT


 


THIS
ASSIGNMENT AND ASSUMPTION AGREEMENT (the “Assignment Agreement”) is made as of September 1,
2006, by and among Community Care RX, L.L.C., a Delaware limited liability
company (“CCRX”), Community Pharmacy Ventures, Inc., a Delaware
corporation (“Ventures”), and National Community Pharmacists Association, a
Virginia corporation (“NCPA”). Unless otherwise defined herein, capitalized
terms used herein without definition shall have the respective meanings
provided in that certain Subcontract Agreement dated as of October 21,
2005 by and between MemberHealth, Inc., an Ohio corporation (“MHRX”) and
CCRX (the “Subcontract Agreement”). This Assignment Agreement is intended to
implement, and not supersede, the provisions of the Subcontract Agreement and
shall not be construed to enhance, extend or limit the rights or obligations of
the parties thereunder, or extinguish any of the representations or warranties
(whether or not so captioned) set forth therein, except as expressly set forth
herein.


 


BACKGROUND


 


WHEREAS,
CCRX and MHRX are parties to the Subcontract Agreement pursuant to which CCRX
provides certain services to MHRX;


 


WHEREAS,
CCRX and Ventures are both wholly owned subsidiaries of NCPA;


 


WHEREAS,
CCRX desires to assign to NCPA, and NCPA has agreed to assume and perform,
certain of CCRX’s rights, duties, and obligations under the Subcontract
Agreement;


 


WHEREAS,
CCRX desires to assign to Ventures, and Ventures has agreed to assume and
perform, certain of CCRX’s rights, duties, and obligations under the
Subcontract Agreement and that certain Business Associate Agreement dated October 21,
2005 by and between MHRX and CCRX (the “Business Associate Agreement”);


 


WHEREAS,
pursuant to the terms of the Subcontract Agreement, CCRX is permitted to assign
or transfer, in whole or in part, its obligations, interest in, and any claim
under the Subcontract Agreement to an Affiliate without the consent of MHRX.


 


AGREEMENT


 


NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged:


 


1.             Assignment to
and Assumption by NCPA.


 


(a)           CCRX
hereby assigns to NCPA, and NCPA hereby assumes and agrees to discharge or
perform when due, punctually and in full, all of CCRX’s rights, duties, and
obligations under Section 1.03 of the Subcontract Agreement.


 






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Material has been omitted pursuant to a request for confidential treatment and
filed separately with the SEC.


 

















 


(b)           CCRX
hereby assigns to NCPA, and NCPA accepts such assignment of, all of CCRX’s
right, title, and interest in and to any annual royalty fee payable pursuant to
the first Section 3 (Annual Royalties) of Attachment 2 to the Subcontract
Agreement.


 


2.             Assignment to
and Assumption by Ventures. Except as set forth in Paragraph 1
above, CCRX hereby assigns the Subcontract Agreement and Business Associate
Agreement to Ventures, and Ventures hereby assumes and agrees to discharge or
perform when due, punctually and in full, all of CCRX’s rights, duties, and
obligations under the Subcontract Agreement and Business Associate Agreement
from and as of the date hereof.


 


3.             Indemnification.


 


(a)           NCPA
shall and hereby agrees to indemnify and hold harmless CCRX and Ventures and
their respective affiliated entities, predecessors, successors, assigns,
officers, directors, managers, members, employees, independent consultants,
attorneys, agents and representatives from and against all claims, demands,
rights, actions, causes of action, suits, damages, charges, losses and expenses
(including reasonable attorneys’ fees) (“Claims”) arising out of or relating to
NCPA’s performance under Section 1.03 of the Subcontract Agreement
pursuant to Paragraph 1 above from and as of the date hereof.


 


(b)           Ventures
shall and hereby agrees to indemnify and hold harmless CCRX and NCPA and their
respective affiliated entities, predecessors, successors, assigns, officers,
directors, managers, members, employees, independent consultants, attorneys,
agents and representatives from and against all Claims arising out of or
relating to Ventures’ performance under the Subcontract Agreement and Business
Associate Agreement pursuant to Paragraph 2 above from and as of the date
hereof.


 


(c)           CCRX
shall and hereby agrees to indemnify and hold harmless NCPA and Ventures and
their respective affiliated entities, predecessors, successors, assigns,
officers, directors, shareholders, employees, independent consultants,
attorneys, agents and representatives from and against all Claims arising out
of or relating to CCRX’s performance (or non-performance) under the Subcontract
Agreement and Business Associate Agreement prior to the date hereof.


 


(d)           NCPA,
Ventures and CCRX shall and hereby agree to indemnify and hold harmless MHRX
and its respective affiliated entities, predecessors, successors, assigns,
officers, directors, shareholders, employees, independent consultants,
attorneys, agents and representatives from and against all claims, losses,
liabilities, costs, fees, arising from or relating to the assignment of the
Subcontract Agreement contemplated herein.


 


4.             Governing Law. This
Assignment Agreement shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Virginia, without regard to
conflict of laws principles.


 


5.             Amendment. No amendment
or modification of this Assignment Agreement shall be effective unless it is
set forth in writing and signed by both parties to this Assignment Agreement.


 






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Material has been omitted pursuant to a request for confidential treatment and
filed separately with the SEC.


 


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6.             Counterparts.
This Assignment Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.


 


7.             Successors and
Assigns. This Assignment Agreement shall be binding upon the parties
hereto, and their respective successors and assigns.


 


IN WITNESS WHEREOF, this Assignment Agreement has been duly executed by
the parties hereto as of the date first above written.


 


 


	
   

  	
  COMMUNITY CARE RX, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kurt A. Proctor

  	
   

  
	
   

  	
  Name:

  	
  Kurt A. Proctor

  	
   

  
	
   

  	
  Title:

  	
  Chief Operation Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMMUNITY PHARMACY VENTURES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kurt A. Proctor

  	
   

  
	
   

  	
  Name:

  	
  Kurt A. Proctor

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NATIONAL COMMUNITY PHARMACISTS
  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce T. Roberts

  	
   

  
	
   

  	
  Name:

  	
  Bruce T. Roberts

  	
   

  
	
   

  	
  Title:

  	
  EVP & CEO

  	
   

  
						



 


ACKNOWLEDGED AND AGREED:


 


 


MEMBERHEALTH, INC.


 


 


	
  By:

  	
  /s/ Charles E. Hallberg

  	
   

  
	
  Name:

  	
  Charles E. Hallberg

  	
   

  
	
  Title:

  	
  President & CEO

  	
   

  



 






***
Material has been omitted pursuant to a request for confidential treatment and
filed separately with the SEC.


 


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